Kitimat methanol plant future
hinges on cheaper gas price

By MALCOLM
BAXTER

methanol plant may have
many things going for it,
but they mean nothing if it
can’t get a reduction in the

rate Pacific Northern Gas ©

charges for transporting
gas to-the facility,

That was
message Methanex CEO
Pierre Choquette delivered .-
when the B.C. Utilities
Commission held hearings
into PNG’s rate increase
applications here.

of testimony, Choquette
described the Kitimat fa-
cility as “blessed” when it
came to the location given
its proximity to both west-
ern North America and Pa-
cific Rim customers.

He also noted the plant
had reduced its costs by 20
per cent and had seen ca-
pital expenditure to im-
prove its, performance,
especially in meeting en-
vironment ministry regula-
tions.

The methanol facility
has been closed since Last
July because of high
operating costs.

Choquette described. the
company’s goal as making
Kitimat “the very best..in
North America,” and not
compete against other
plants throughout the world
- ¢ither Methanex’s or
anyone else's — that had
access to cheap gas,

Choquette emphasized
that Methanex did not ex-
pect the same return from
each of its facilities but
did require that they “carry
their own weight” — in
other words be able to

break even at the bottom’

of the methanol price
cycle.
What did that mean in
the case of Kitimat?
Cautioning he was
using “ballpark numbers”,
Choquette said a shut

down plant was costing the”
‘-company.= about uS$20" ' i

“million a’year.

Given current methanol
prices and US$5 per giga-
joule gas, those losses
would be halved.

If it could: get the trans-

portation rate it wants from -

PNG - 32 cents per giga-
joule or about one third of
what it had been paying -—
the losses would drop to
US$5 million per year.

Throw in the package
negotiated with the Job
Protection Commissioner,
and the Kitimat operation
would be close to break
even.

Given the current and
projected supply and de-
mand situation, Chaquette
predicted methanol prices
would stay. where they

Police
chase
drivers

phone cails from the pub-.

lic. concerned about the
safely of children in school
zones.

The, complaints include
drivers who speed, fail to
stop at stop signs and dri-
vets who are not yielding
to pedestrians.

The Terrace RCMP will
be increasing patrals in all
13 school zones in Terrace

and Thornhil] from, March .

24 to April 2, 2001.

Drivers are reminded to
observe the 30km/hr
school zone signs. Tickets
for speeding will be issued
and the. penaltics range
from $173-$460, say po-
lice. ;
Police are alsa remind-
ing the public to observe
the crossing guards at var-
ious school crossings as
well,

G

a) |
www.parlicipaction.com

the basic |,

were for the next few

‘, years.
METHANEX’s Kitimat .

He also predicted US

~Gulf gas prices would ease

— although he admitted

there were those who dis-

agreed with his assess-
ment.

* Later in his testimony
~he also confirmed that if it
could get the rate it- is
Seeking from PNG plus
“reasonable” gas and me-

;:thanol prices, the Kitimat

“plant could be fired up

without the company hav-

- ing reached an agreement
During his three hours ”

with the provincial govern-
ment on royalty and tax
breaks.

However, it would still
be seeking thase.

On the other side of the
coin, if the BCUC was to
allow PNG to charge the

. same or higher rates, Cho-
» quette said the company

would honour its abliga-
tions — the 80 per cent ta-
ke-or-pay clauses in its
contracts - but concentrate
on “finding alternative so-
lutions”.

Several times during his
testimony he put heavy
emphasis on the word
“now” in terms of the'tim-

ing for agreement ona re-

duced PNG charge.

Following the adjourn-—

ment of the hearing, Cho-
quette thought he had
been able to make “good
points” in terms of the
need to continue working
on reducing costs for the

~ Kitimat plant.

As for its chances of re-
opening, he said “If we
can find a resolution here

to get a lower tariff...and
looking at what the metha-
nol market looks like over
the next period, I think the
chances are very goad.”

Given he had indicated
the plant would be losing
half as much if it was run-
ning now, Choquette was
asked why he didn’t fire it
up tomorrow ‘and save
some money.

“It would really gét in
the way of what we’re try-
ing to do here,” he ex-
plained. I'd like to have
more certainty about the
costs poing forward.

Restarting just to shut
down six months later
also made no sense. “Why
do that?”

BCUC is expected to
deliver its decision by
month’s end.

The Terrace Standard, Wednesday, March 28, 2001 - Al]

m Senseless destruction

VANDALS appear to have destroyed the Terrace Public Library's lawn sign.
It was found in pieces last weak, Fortunately, plans are underway to replace
it with a new one featuring the library and the art gallery.

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